Soundings

Fine Print

Spring 1994

Mayor
Giuliani has eliminated a key portion of New York Citys affirmative action
program for city contracting. The provision, which dated from 1992, allowed
female- or minority-owned companies to win contracts even if their bids were
up to 10 percent higher than the lowest bid submitted. Predictably, Giuliani
came under fire from minority advocates. But as Newsday columnist
Sheryl McCarthy reports, the biggest beneficiaries of the scrapped “price
preference” program turn out to have been—white men.

Under the program, a business owned by a white man could qualify for a
price preference by forming a joint venture with a smaller female- or
minority-headed firm. In 1993, six out of ten of the programs beneficiaries
were joint ventures. That is why, as McCarthy reports, businesses owned by
white men collected $22.8 million of the $59 million the city awarded in 1993
under the price-preference program. Their female or minority partners
collected only $12.2 million, and outside of joint ventures, firms owned by
blacks received only $2.9 million.

In any case, the price-preference program seems to be gone for good. A few
days after Giuliani terminated it, a New York state judge ruled the program
invalid under a state law requiring government agencies to accept the lowest
bids in awarding contracts.